Asia, price rises spice up McCormick profit

By IBT Staff Reporter On 03/29/11 AT 11:40 AM

McCormick & Co beat profit estimates for the fifth straight quarter, as the top U.S. spicemaker raised prices to offset high raw material and packaging costs, and saw strong demand in Asia and in its domestic market.

Sparks, Maryland-based McCormick, which began operations in 1889 in Baltimore, sells spices, herbs, seasoning blends and sauces to grocers, warehouse clubs and discount and drug stores.

For December-February, the company earned $76.8 million, or 57 cents a share, above Wall Street expectations of 54 cents a share.

Sales rose more than 2 percent to $782.8 million, but fell short of estimates as consumer sales in Europe were weak and higher prices made some shoppers buy less.

The biggest challenge we face heading into 2011 is the unprecedented increase in the cost of spices and herbs, along with higher costs for commodities such as wheat and soybean oil, and increases in plastics, another packaging materials, Chief Executive Alan Wilson said on a conference call with analysts.

The CEO said most of the price rises and related challenges had been dealt with, and the company expects its domestic consumer business to be stronger as the year proceeds.

Sales at its consumer division, which are usually sales through retailers, rose 3 percent in Americas and 11 percent in the Asia/Pacific, but fell 10 percent in Europe and the Middle East.

McCormick, which sells its products under the Lawry's and Old Bay labels besides its namesake brand, backed its 2011 earnings outlook of $2.80-$2.85 a share and sales growth of 5-7 percent.

Shares of the company were down 1 percent at $49 on Tuesday morning on the New York Stock Exchange.

(Reporting by Nivedita Bhattacharjee and Renju Jose in Bangalore; Editing by Don Sebastian)